Berry Soars with 128% Increase in Net Income

Berry Petroleum Company earned net income of $49 million, or $1.08 per diluted share, for the three months ended June 30, 2008, up 128% from net income of $21.4 million, or $.48 per diluted share excluding the net gain on sale of assets of $30.6 million in the second quarter of 2007, according to Robert F. Heinemann, president and chief executive officer. Discretionary cash flow totaled a record $108 million in the quarter, up 82% from $59.4 million in the second quarter of 2007.

For the second quarter ended June 30, 2008 net production averaged a record 29,000 barrels of oil equivalent per day (BOE/D), an increase of 7% from the 27,195 BOE/D achieved in the same 2007 period. The average realized sales price, net of hedging, for the 2008 second quarter was $69.77 per BOE, up 54% over the $45.43 per BOE received in the 2007 period. Oil and gas revenues rose 63% to $185 million in 2008 compared to $113 million in 2007. The Company drilled 120 gross (112 net) wells in the second quarter of 2008.

Mr. Heinemann said, “Execution of our development plans to reach a mid-year production goal of 30,000 BOE/D has been a focus for each of our asset teams this year and I am pleased to announce that through growth in both our oil and gas assets we reached this production milestone and exited the second quarter of 2008 at 30,000 BOE/D from our base assets.

“Our oil development projects in California continue to deliver exceptional results. Diatomite production is up 24% over first quarter 2008 levels to approximately 1,700 BOE/D. We continue to bring on new wells, expand infrastructure and appraise the productive limits of the field. We expect to exit 2008 in the diatomite with production of 3,000 BOE/D. Production from Poso Creek is up 19% from the first quarter of 2008 to 3,200 BOE/D. Our infill horizontal program, along with our development at Ethel D, has been successful in keeping our South Midway production decline in the 5% range as expected.

“Our natural gas assets also performed well with Piceance production in June up 24% over the first quarter of 2008, with average daily production of 20.8 MMcf/D. We completed 12 wells in the Piceance during the quarter and we expect to bring an additional 19 wells on production during the third quarter. Production in the DJ basin was steady at 19.6 MMcf/D and we also completed the interpretation of an additional 75 square miles of recently acquired seismic data in the DJ and expect to replenish our low-risk drilling inventory.

Six Months Results

Net income for the first six months of 2008 was $92.2 million or $2.03 per diluted share, up 30% from $70.8 million or $1.58 per diluted share in the comparable 2007 period. Excluding an asset sale and impairment of an asset held for sale for a combined net after-tax gain of $28.8 million, net income for the six months ended June 30, 2007 was $42.0 million or $.94 per diluted share.

Revenues for the six months of 2008 were $400.8 million, up 35% from $296.7 million (including a $50.4 million gain on sale of assets) in the same 2007 period. Discretionary cash flow totaled $210 million for the first six months of 2008, up from $108 million in the comparable 2007 period.

For the six months ended June 30, 2008, net production averaged 28,530 BOE/D, an increase of 8% from the 26,330 BOE/D achieved in the same period in 2007. The average realized sales price per BOE, net of hedging, for the six months ended June 30, 2008 was $67.23 per BOE, up 50% from the $44.72 per BOE received in the 2007 period.

East Texas Acquisition Closed

On July 15, 2008 Berry closed on the previously announced East Texas natural gas asset acquisition for a price of $653 million, including closing adjustments that reflect revenue and capital from the February 1, 2008 effective date. Proved reserves are estimated to be 335 billion cubic feet equivalent with an all-in finding and development cost of $2.77/Mcfe. The acquisition adds approximately 32 MMcfe/D to Berry’s production from 100 producing wells.

Development plans include over 100 drilling locations targeting stacked pays in various productive zones including the Pettit, Travis Peak, Cotton Valley, and Bossier sands, and the Bossier and Haynesville shales. We increased our 2008 capital budget by $75 million to a total of $370 million to fund the development of this asset. We have also conducted three 30-day vertical Haynesville tests which averaged 1.2 MMcf/D per well and are encouraged by the potential for the horizontal development of this resource and the realization of the upside potential of this acquisition.

With the contribution of these assets, Berry’s production today tops 35,000 BOE/D and we expect to deliver a 20% to 25% increase in production over 2007 and a 40% to 45% increase in net proved reserves in 2008 at a finding and development cost between $10 and $13 per BOE. Berry expects to end the year with between 235 million and 250 million BOE of proved reserves and average production for the year of between 32,500 and 33,500 BOE/D. For the third quarter of 2008 Berry expects to average approximately 35,000 BOE/D and to achieve a December 2008 exit rate between 39,000 and 40,000 BOE/D.”

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